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ANALYZING AN industry. Strategy: A View from the Top. Group 5 Dougless Hentges Austin Mapes David Murdock Cindal Peterson Molly Redden. What is an Industry. Products Customers Geography Stages in the production-distribution pipeline . Potential Entrants. Threat of new entrants.
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ANALYZING AN industry Strategy: A View from the Top • Group 5 • DouglessHentges • Austin Mapes David Murdock • Cindal Peterson • Molly Redden
What is an Industry • Products • Customers • Geography • Stages in the production-distribution pipeline
PotentialEntrants Threat of new entrants Bargaining power of suppliers Industry competitors Rivalry among existing firms Bargaining power of buyers Suppliers Buyers Threat of substitute products or services Substitutes Industry Structure
Industry Evolution • Process of slow, gradual change • Models can help us understand how and why industries change • Not like structural change
Methods for Analyzing an Industry • Radical, progressive, creative, and intermediating • Two types of obsolescence define these paths of change: • Threat to industry’s core activities • Threat to industry’s core assets
Four Trajectories of Change • Radical- Core activities and core assets threatened at the same time • Progressive-Most Common form, neither core activities or assets are threatened • Creative-Core assets threatened, core activities not • Intermediating-Core activities threatened but core assets not
Industry Structure, Concentration, and Product Differentiation • Analyze change in terms of vertical structure to horizontal or vice versa • Changes in degree of industry concentration • Increase or decrease in degree of product differentiation • Three industries: • Telecommunications, computers, and television • “Rule of Three and Four”
Product Life Cycle Model • Introduction • Growth • Maturity • Decline
New Patterns • Technological standards • Competition for the standard • C.K. Prahalad Model: • Three phases for industry evolution • Globalization
Methods for Analyzing an Industry • Segmentation • Competitor Analysis • Strategic Groups
Segmentation • Strategic Segmentation • Customer Characteristics • Product or service related variables
Competitor Analysis • Who are our firm’s direct competitors now and in the near term? • What are their major strengths and weaknesses? • How have they behaved in the past? • How might they behave in the future? • How will our competitors’ actions affect our industry and company?
Strategic Groups • Numerous Competitors • Rivalry • Fast food, Pharmaceuticals
Analyzing Product/Market Scope • Market Analysis • Actual and potential size of market • Market and segment growth • Market and segment profitability • Underlying cost structure and trends • Current and emerging distribution systems • Regulatory issues • Technological changes
Analyzing Product/Market Scope • Growth Vector Analysis
Analyzing Product/Market Scope • Gap Analysis • Can identify additional avenues for growth
Analyzing Product/Market Scope • Profit Pool Analysis • Profit pool: total amount of profit earned at all points along the industry’s value chain • Four Steps • Define pool’s boundaries • Estimate its overall size • Allocate profits to the different value chain activities • Verify Results